Businessweek Archives

Germany

November 08, 1992

International Outlook: Global Wrapup

GERMANY

German Chancellor Helmut Kohl has finally admitted this week what economists, bankers, and businessmen knew two years ago, when the West signed up to bail out the East: The tab for reunification is going to be colossal. Kohl is warning that new taxes will be needed to service an estimated $260 billion in off-budget expenses, including debt piled up by the Treuhand privatization agency, which the government must begin paying off in 1995. But economists predict the $260 billion estimate could rise as much as 50% by 1995. Kohl is using the fiscal crunch to put pressure on unions to cut their wage demands and on federal and state governments to pare back spending.Edited by Stanley Reed